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Think a bond is the only way to invest in property? Think again…

by , 06 March 2014

When most people think about how to finance a property investment they tend to start and stop with bond. While bond are useful, there are other much more innovative ways to finance your property investments. Today we explore some “no money down” approaches to property investing…

What does “no money down” property investing entail?

“No money down” deals are often made to seem very complex and difficult to pull off.

In reality, they’re are very simple and ordinary schemes. There are different variations you can use in different situations. Most “No Money Down” schemes involve manipulating the purchase process in some way. But you can also go the credit card route.

Seven ways to build a property empire with “no money down” property investing

  1. You get a 100% bond. In this way, you don’t put any of your own money down but borrow from the bank and repay it over time.
  2. You get 100% funding for a property from a combination of a bond and “Seller Financing”.
  3. You get 100% “Seller Financing”.
  4. You get a “Gilted” Deposit from the seller and get a bond for the rest.
  5. You use the family silver (or some other asset) as the deposit for the property. Clearly the seller has to agree to receive an asset other than money as a deposit.
  6. You can get a personal loan, or overdraft in combination with your bond.
  7. You can use your credit card (or variety of credit cards) to top up your bond to the purchase amount.

What is seller financing?

Let’s say you want to buy a property for R1 million and have no money of your own at all. You’ve qualified for a 90% bond that leaves you R100,000 short. What do you do?

Well, you can get a personal loan, or get an overdraft from your bank, or you may just borrow the money from your friends or family. It’s easy to see how (in theory) at least) you could borrow the R100,000 from your best friend or your Dad.

Or you can approach the seller for seller financing.

With seller financing in its simplest form, you just borrow R100,000 from the seller. It really is that easy.

 In this case, the seller would lend you the R100,000 and you’d repay them over an agreed time, at an agreed rate and an agreed amount per month (or quarter, or week, or whatever). You would repay the seller in exactly the same way you’d repay your friend or your Dad or your personal loan or overdraft, explains realestate.msn.com.

No money down property investing is a huge topic. We’ll explore other no money down property investment strategies in the next few weeks. 



Think a bond is the only way to invest in property? Think again…
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